Falion is a master in Conjuration. While he enjoys the town of Morthal enough to set up a home and business, he seems ever wary of a lurking danger. His academic interests include vampirism and the undead; perhaps he is aware of more than he is letting on.

If you inquire around Morthal about the wizard in town, you are told that he seems to be up to something; specifically, that he goes out into the marsh in the middle of the night. A conversation with Agni, his ward and apprentice, reveals that she had a "bad dream" in which Falion went away and made "monsters" while she slept. Falion dismisses this as only a dream, and insists his talents are needed to “keep the town safe”.

If you wait near Falion’s house until 1 am, you can follow him as he heads out of town, past the mill, and northwest into the marshes. He journeys to what appears to be a summoning circle (presumably related to Falion's specialty). Upon confronting him, he will demand that you leave him to his "work" and never speak to anyone about what you observed that night, although he won't reveal precisely what his work is. You can agree to keep quiet, or blackmail him for 200 gold. Regardless of your choice, you may then report him to the jarl if you so desire.

After reporting Falion to the jarl, she will immediately find and confront him, threatening dire consequences for Falion if he continues his actions. The scene differs depending on the current jarl - Sorli the Builder or Idgrod Ravencrone.

Idgrod Ravencrone

Sorli the Builder

Idgrod Ravencrone: "Falion, I am disappointed."

Falion: "What is the meaning of this?"

Idgrod: "You've been exploring places you shouldn't, and you know it."

Idgrod: "It stops at once, or else there will be consequences of an unpleasant nature. Do you understand?"

Falion: "I... Yes, I understand."

Sorli the Builder: "I'm told that you're up to something out in the marsh, Falion."